If you’ve ever driven around central Denver or the I-25 corridor, chances are you’ve noticed quite a number of signs directing you to the nearest emergency room. What many people don’t know is that many of those ERs are “freestanding”—meaning they are not connected to a hospital. If you visit a freestanding ER and have a need for hospitalization or surgery, you will be transported via ambulance to a hospital.
The average consumer might not see much difference between these freestanding emergency rooms and an urgent-care site — until they see the bill. Freestanding ERs typically charge rates that are elevated way above urgent-care rates. If that ER is owned by a larger hospital system, they may even charge the same amount as the parent hospital.
We are talking several orders of magnitude in cost differential. For example, under my own health insurance, an urgent-care visit costs a flat $65 copay. An emergency-room visit is going to run me a $500 copay, plus 30 percent coinsurance, but only after my $5,500 deductible is met. By contrast, a visit with my primary-care doctor is free, fully covered by my plan.
Kim Bimestefer, executive director of the Department of Health Care Policy & Financing, which oversees Colorado’s Medicaid program, recently made headlines conveying the damage that these freestanding ERs are having on the state’s Medicaid budget. How much damage? Enough that Bimestefer has calculated it will save Colorado taxpayers money in the long run to pay hospitals to shut them down.
Medicaid is uniquely harmed by freestanding ERs because there is much less control over their practices. For example, Medicaid can’t fence out ERs as “out-of-network,” and can’t charge patients higher out-of-pocket costs when overly expensive levels of care are sought. In effect, a Medicaid member is free to visit any level of care that is most convenient, even if the severity of the health issue doesn’t necessarily require emergency medicine. This includes visiting a freestanding ER for a mild sinus infection.
A study conducted by Health Affairs magazine found that up to 27% of emergency room visits could be handled at an urgent-care facility or within a primary-care doctor’s office. That’s an estimated $4.4 billion of cost to the system that we could be avoiding.
Imagine an alternate universe, in which a primary-care clinic was located on every corner and open 24/7. The reason this isn’t already the case is because that kind of revenue model is not supported by most of today’s healthcare reimbursement arrangements with insurance companies.
Overuse of ERs is the type of phenomenon that directly translates to higher insurance premiums. It’s another area that must be addressed by implementing alternative payment models that incentivize more reliance on primary care, and less on ERs.
Arguments often are made that freestanding ERs are a way to expand access to care. If that were the case, you would find them dotted all over in Colorado’s rural and underserved communities. Of Colorado’s 44 freestanding ERs, only 8 — all in ski-resort towns — are located outside of the Front Range. Furthermore, a study conducted by the Colorado Health Institute found that freestanding ERs on the Front Range are located in communities with a median income of more than $100,000 per year. Clearly, this is a story about revenue, not access.
The impact on Medicaid is felt by all Colorado taxpayers. And for those of us who hold commercial or Medicare insurance, we can feel it even more acutely in our premiums and out-of-pocket expenses.
Colorado’s freestanding ER’s should take up Kim Bimestefer on her offer. There are market-based forces diminishing reimbursements to freestanding ERs, so the timing might be ideal to capitalize on this opportunity.
While we are at it, we should push to convert these facilities into lower-cost, higher-value access points for the community, such as primary-care and behavioral health services. To encourage such a push, we should couple the ER cash-out offer with enhanced reimbursement models for primary care.
If we can make it more convenient to visit a primary care doctor, via expansion of hours, services, and locations — especially in rural Colorado — we can reduce unnecessary trips to the ER and reduce the cost of healthcare for all Coloradans.
Ashley Thurow is executive director of Monument Health, a clinically integrated network based in Grand Junction. Contact: Ashley.Thurow@monumenthealth.net